8990 Holdings continues to show way in housing business

By Lito U. Gagni

8990 Holdings continues to rewrite the housing business in the country with its bold and innovative low price points for its housing units exemplified by its 2-percent down payment plan.

That two percent down payment plan which allows call center agents or a family earning P30,000 a month to be able to afford a housing unit has in fact been the reason for the catapulting of the then smallish firm 10 years back to the top of the pyramid of the housing industry.

For 8990 Holdings President and CEO Januario Jesus Atencio III, the success of the low-amortization and low-down-payment plan broke the myth that the low-cost housing business is unprofitable.

In fact, the company last year showed a huge jump in its net income to P3.3 billion, up by a staggering 51 percent from its P2.2 billion profits registered in 2013.

But what is noteworthy in the net income number last year was that it was earned from a lower revenue rise of 43 percent. This means that the company was able to rein in expenses despite the many projects it launched.

The low expenditures were due to several factors: the company’s success in negotiating for lower prices for its materials, the innovation in its construction method through double-casting to produce more panels and even employees’ contributions to the work efficiency.

One reason for the continuing success of the company is the work ethic of its employees. And the need to save and advance the company’s success is in the DNA of its employees.

In fact, there is a story often told among company gatherings of the way a top official espied a nail in a construction site, picked it up aand then put it back to the nail bucket.

Even the free Skype is put to good use when officials from Manila touch base with their Cebu or Davao headquarters. And vice versa.

It is no wonder then that the company is now the top low-cost housing developer in the country in just 10 years of its operations.

Visitors to company gatherings cannot but notice the camaraderie among employees. They are mostly driven and most, in fact, are proud owners of 8990 Holdings’s own projects, called Deca Homes.

If one were to determine the contribution of each employee to revenues, 8990 Holdings would be at the top of the totem pole revenue to employee ratio. For there are only 285 employees scattered over five branches for a company whose revenue size is P3.3 billion.

This is why Atencio, during the annual stockholders meeting held at the MetroClub, said that the company may have to see its employee size to double as it envisions to double its income levels.

So far, the company is on track to its envisioned financial goals as it launches several projects this year, including its first foray into the verticals with its Urban Deca, which has piqued the interests of callcenter agents within the Mandaluyong, Pasig and Ortigas business districts.

Imagine having your own unit near your place of work. That is the main selling point of the Urban Deca Homes which is now 38 days ahead of its schedule with the construction already on the upper ground floor as of July.

Atencio said that the company’s demographics means that there is an unserved segment of the market who are desirous of having their own housing units.

“Our demographic consists of college graduates with stable gainful employment earning at least P35,000 a month. They are renters and not asset owners with little or no savings who are deeply aspirational, have a practical value for money, and are optimistic about the future, “ Atencio told company stockholders.

The company’s notable financial achievements last year, according to Atencio “made us realize that, more than sales velocity, our capacity to build more and more units is the main determining factor to our long-term sustainability.”

It is the company’s vision and innovation that are expected to see it through its meaningful journey of success in the low-cost housing.

In fact, the company has already adopted a new buzzword for its business thrust: “More than housing…” For 8990 Holdings may yet capture the interest of savers who want to sit back and relax in the twilight of their years, confident in the thought that their investments in 8990 Holdings, via ownership of shares, are sustaining their retirement years. That is what market analysts are pointing to in their analysis of the stock market, specifically real estate stocks.

What they are pointing out is that 8990 Holdings should not just be analysed based on its housing business. There is more to it and this could in fact be the reason for the entry of two cornerstone investors in the company.

Khazanah Nasional Berhad, the sovereign wealth fund of Malaysia, and TPG Capital, one of the top five equity funds in the world, probably saw 8990 Holdings not just for its housing business.

And that means 8990 Holdiings may again innovate on a new business model not just dependent on constructing housing units.